Afghanistan: can its private sector step up?

Summary

Business Daily – Afghanistan: Can Its Private Sector Step Up?

BBC World Service | Host: Hannah Beaulieu | Air Date: October 29, 2025

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Episode Overview

This episode explores Afghanistan’s severe economic challenges following the Taliban’s 2021 return to power. With international aid drastically reduced and the state rocked by sanctions, natural disasters, and infrastructure breakdowns, the podcast investigates whether Afghanistan’s private sector could offer a pathway to national recovery, resilience, and self-sufficiency.

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Key Discussion Points & Insights

1. The Dire Economic Situation

• Afghanistan is facing unprecedented hunger and malnutrition, with 15 million people acutely at risk. (01:13)
• Following the US-backed government’s collapse and the Taliban’s rise, the economy shrank drastically—“Afghanistan's economy contracted by about a quarter when the Taliban took power…” (Kate Clark, 03:40)
• Aid, once the economic mainstay, fell overnight and resumed only as humanitarian support, not government funding.

2. Daily Realities for Afghan Businesses

• Business owners are struggling with collapsed demand. A Kabul children's clothing manufacturer describes downsizing due to lack of sales:

  "When people struggle to buy food, how they can think about clothes?" (Children's Clothes Manufacturer, 02:35)

• Informal tailoring and households producing clothes are undermining formal retail, as home tailors have zero overhead—good for survival but bad for small businesses’ viability.
• 85% of Afghans are estimated to live on less than $1 a day (2024).

3. Banking and Sanctions: The Chokehold

• Sanctions on Taliban leaders cripple financial and trade capabilities—banking is extremely difficult for businesses and individuals.
• The 48-hour Internet blackout highlighted Afghanistan’s fragility:

  “It was catastrophic…Flights were cancelled, banking was impossible, money transfers were impossible. Money transfers in, so remittances…emergency services were affected.” (Kate Clark, 05:52)

• Remittances from Afghans abroad actually exceed the value of aid, yet sanctions and financial constraints stifle flows.

4. Changing Business Landscape Under the Taliban

• Mixed impacts: some sectors, like online businesses, have thrived.

  “If I were to put percentage on it, I would say our business has gone up by 70 to 80% after the fall of the Republic.” (Afghan Business Owner, 08:15)

• Others, like medicine importing and traditional retail, face back-breaking taxes and regulatory uncertainty.
• Gender segregation stricter than ever, sharply limiting women’s economic and public life.

5. The Hope (and Limits) of Technology and Entrepreneurship

• Nasrat Khalid, CEO of Aseel App, argues that tech-enabled businesses can scale rapidly despite Afghanistan’s many hurdles:

  “Tech enabled companies are able to make a very big difference in very little time. And they can be the game changer for the rest of the economy.” (Nasrat Khalid, 11:20)

• Localized fintech and tech infrastructure are vital, especially for enabling women to work from home and for expanding exports.

6. Barriers to Private Sector Growth

• “The main barriers is basically the legal and regulatory environment. It is very unpredictable and many businesses are unable to predict the future…” (Ahmad, Business Network Boss, 12:31)
• International non-recognition of the Taliban government complicates cross-border trade; lack of formal trade agreements results in unpredictable and shifting barriers.
• Afghan private sector is seen as essential:

  “There is no future for Afghanistan without its private sector.” (Ahmad, 13:31)

7. Gender, Recognition, and International Politics

• The Taliban say private sector growth requires lifting sanctions, unfreezing reserves, international recognition, and ending travel bans on members (Kate Clark, 16:17).
• But international powers remain firm: sanctions stay while women and girls remain excluded from education and much of public life.
• Progress on inclusion is demanded before any easing of the economic stranglehold.

8. A Sector Stepping Up—in the Shadows of Crisis

• Samira Syed Rahman (Save the Children):

  "If the banking conditions and the liquidity challenges and the issues of lack of access to credit are resolved, I see an Afghan private sector that is thriving. In five years, Afghanistan can be a self sufficient country if its private sector is functioning..." (17:25)

• Recurring shocks (earthquakes, internet blackouts) hinder recovery, but resilience persists.

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Notable Quotes & Memorable Moments

| Timestamp | Quote | Speaker | |-------------|--------------------------------------------------------------------------------------------------------------|------------------------------------| | 01:54 | "There is no future for Afghanistan without its private sector and it has also been shown in the past that you cannot build your country with aid." | Ahmad (Business Network Boss) | | 02:35 | "When people struggle to buy food, how they can think about clothes... But it has weakened our business." | Children’s Clothes Manufacturer | | 05:52 | "Flights were cancelled, banking was impossible, money transfers were impossible... emergency services were affected." | Kate Clark (AAN) | | 08:15 | "I would say our business has gone up by 70 to 80% after the fall of the Republic." | Afghan Business Owner | | 11:20 | "Tech enabled companies are able to make a very big difference in very little time..." | Nasrat Khalid (Aseel App) | | 12:31 | "The main barriers is basically the legal and regulatory environment. It is very unpredictable..." | Ahmad (Business Network Boss) | | 13:31 | "There is no future for Afghanistan without its private sector." | Ahmad | | 17:25 | "The Afghan private sector has really stepped up to fill that void from, you know, the lack of foreign funding..." | Samira Syed Rahman (Save the Children) |

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Important Timestamps

• 01:13 – Setting the scene: hunger and economic catastrophe
• 03:40 – Economic collapse post-Taliban takeover
• 05:52 – The impact of sanctions & Internet blackout
• 07:17 – Voices from Afghan entrepreneurs/business owners
• 10:41 – Tech entrepreneurship and potential for impact (Aseel App)
• 12:31 – Regulatory and legal challenges for businesses
• 16:17 – The Taliban’s stance on sanctions and international recognition
• 17:25 – Afghan private sector resilience and future potential

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Conclusion

Although Afghanistan’s private sector is showing admirable resilience—sometimes innovating rapidly in adversity—serious obstacles remain: unresolved sanctions, political isolation, a failing banking system, natural disasters, and gender exclusions. Yet, as contributors across sectors stress, without a healthy, stable private sector, Afghanistan cannot move from survival to prosperity. The episode ends on a note of cautious optimism: lasting recovery depends on meaningful inclusion, trade engagement, and an end to international economic isolation.

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For in-depth stories and more Business Daily analysis, listen to the full episode via BBC World Service.

Transcript

[Narrator/Reporter]

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[Hannah Beaulieu]

Hello and welcome to Business Daily from the BBC World Service. I'm Hannah Bewley. Today we head to Afghanistan, a country where almost 15 million people face severe hunger and according to the UN is experiencing the sharpest surge in malnutrition ever recorded. The economic situation has been worsened by devastating earthquakes and a recent 48 hour Internet blackout. The country has relied heavily on aid, but when the US backed government fell in 2021 to be replaced by the Taliban, the economy contracted drastically and the amount of international aid coming in fell sharply. So could the private sector provide a route to recovery for Afghanistan's economy?

[Ahmad (Business Network Boss)]

There is no future for Afghanistan without its private sector and it has also been shown in the past that you cannot build your country with aid.

[Hannah Beaulieu]

Menu Boosting Afghanistan's Private sector that's all coming up on today's program.

[Children's Clothes Manufacturer (BBC Producer Voice)]

The only reason I downsized was because there were no sales. When there are no sales, production stops accordingly.

[Hannah Beaulieu]

This is the reality for a children's clothes manufacturer in the Afghan capital Kabul. They were describing their situation to the Afghanistan Analyst Network, which is a non profit research organization and their words are spoken by a BBC producer.

[Children's Clothes Manufacturer (BBC Producer Voice)]

When people struggle to buy food, how they can think about clothes. Most people make clothes at home because there is a tailor in every family, especially women, because most of them know how to sew. They come to the shop and buy one, two or three Types of clothing, copy them at home and then sell the copies cheaply. They can sell the clothes cheaply because they have no rent to pay, no taxes, no employee salaries, no expenses, just the clothes from the market. Good for them. They make a living and find the money to cover their daily expenses. But it has weakened our business.

[Hannah Beaulieu]

It's one of many similar stories in a country where the average income is amongst the lowest in the world. In 2024, it was estimated that 85% of the population live on less than $1 a day. Kate Clark is the co director of the Afghanistan Analyst Network. She told me what the economic situation had been like since the Taliban takeover in 2021.

[Narrator/Reporter]

Afghanistan's economy contracted by about a quarter when the Taliban took power, and that was largely because it had benefited from vast amounts of unearned income. So that would be the spending by the foreign armies, the military support and international aid. That stopped overnight when the Taliban took power. So most of the aid came back on, but that came back on as, not as support to the government, but as humanitarian aid. But the Taliban did manage to get control of the, of the finances, the customs, the revenue. They had a functioning state to inherit, basically, and they took it over. And then this year has come a further blow, which was the US was the main contributor of civilian aid. So 40% of civilian aid last year came from America and Trump completely halted it. So we're talking about 400. Over 400 health clinics have closed. Agricultural projects support, education, health. I should say at the same time that Afghans living abroad contribute more in remittances than aid was about double. Some of the worst indicators are going up. So child malnutrition, maternal mortality. We may not have the figures, but we can see the evidence on the ground. You see, for example, teenage boys taken out of school to work. A very difficult situation for most Afghans.

[Hannah Beaulieu]

Kate says without a functioning banking system, everything is a challenge.

[Narrator/Reporter]

There's all the problems that come from Afghanistan still being under sanctions. There are waivers, but it's still very difficult to do banking, to do international transactions, or even, you know, transfer money within the country. That's still tricky.

[Hannah Beaulieu]

There are no specific sanctions against the Taliban government, but there are long standing international sanctions on some Taliban leaders and entities associated with them. Although historically these were meant to impede funding for terrorism, now that the Taliban hold power in Afghanistan, in reality, these sanctions can impact how effectively the state can function. Add to this the Internet blackout of the past few weeks.

[Narrator/Reporter]

I mean, it was just, it was catastrophic. And for whatever reason, that the Taliban decided to close down the Internet. Flights were cancelled, banking was impossible, money transfers were impossible. Money transfers in so remittances, people couldn't make calls, emergency services were affected, online education, you name it.

[Hannah Beaulieu]

Basically, when you speak to businesses and people in Afghanistan, what's the sense that you get? How are people faring day to day?

[Narrator/Reporter]

Lack of consumer demand was the main thing. If you've got people who've become much poorer, if your customers have become much poorer, it's really difficult, particularly if you're not in a sector that is producing essential goods and for women, because Afghanistan is a very gender segregated society normally, but that's become extreme under this government. So unrelated men and women aren't legally allowed to mix. So if you imagine, if you're a businesswoman, a particularly in a country where personal contacts are really important, it's really, really difficult.

[Hannah Beaulieu]

Kate Clark points out that with the Taliban in power, Afghanistan, with its population of 40 million, is more peaceful. And the World bank says the stability has led to poverty in rural areas declining as people have better access to markets. But it also says poverty has increased in urban areas. People are wary about criticizing the authorities there. These businesses spoke to our reporter in Afghanistan, but didn't want to use their names.

[Afghan Business Owner]

There are lots of opportunities. You just have to look around. So I realized it's Taliban's emirate now. They like things like caps and waistcoats. And so I started this immense fashion and perfume shop. I am one of the importers of medicine in Afghanistan. Custom duties and taxes in our country are back breaking, causing us a lot of problems. Similar taxes are collected once at the entry to the country a second time when the medicine is brought to the market, and then the hospitals have to pay income tax on the sale of that same medicine. Before 2021, taxes were not so high. A lot of businesses have already closed down. And if things continue like this, others will follow suit because they don't see a way out. Our business has improved after the fall of the Republic. If on the one hand the media business has paled, online businesses are expanding. A lot of people are using YouTube, so they purchase cameras, mics and lights for filming their YouTube videos and for their online businesses. If I were to put percentage on it, I would say our business has gone up by 70 to 80% after the fall of the Republic.

[Hannah Beaulieu]

You're listening to Business Daily from the BBC World Survey.

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[Nasrat Khalid]

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[Hannah Beaulieu]

Upfront payment of $45 per 3 month plan $15 per month equivalent required new customer offer first 3 months only, then full price plan options available, taxes and fees extra. Cmo.com I'm Hannah Beaulieu and today we're hearing about the efforts to boost Afghanistan's private sector. For some, encouraging businesses and entrepreneurs is a way to move away from the country's reliance on the traditional ways of administering aid, which had been steadily declining. UN figures show that overall it's gone down from $3.8 billion in 2022 to just over $750 million this year. Nasrat Khalid is founder and CEO of Aseel App, which initially started as a way for tradespeople in the country to sell their products directly to customers all over the world. It now offers people anywhere the chance to make humanitarian donations to people in need. In Afghanistan, he was raised as a refugee and is now based in the US and previously worked for large international development organisations. And that's where he said he realised that wasn't the best mechanism for a country to become prosperous in the long term. Even before the recent communication blackout, there were challenges doing business.

[Nasrat Khalid]

The infrastructure is just not there. You need a fintech system so you can pay the vendors more, so you need the technology to be localized so people can use it. There is also issues now with mobilizing having groups of large retailers, women groups producing items, having their own businesses. They need to work from home. But technology's made it easy. It's not impossible.

[Hannah Beaulieu]

Do you think businesses, particularly ones that are as small as yours, can make a difference?

[Nasrat Khalid]

Absolutely. I think especially with the tech technology, you've seen companies come out of nowhere and just take over A huge segment of market in like two, three years. Tech enabled companies are able to make a very big difference in very little time. And they can be the game changer for the rest of the economy.

[Hannah Beaulieu]

I asked him what needed to happen on a broader scale.

[Nasrat Khalid]

Well, I think everyday people need to be engaged. We need to stop making engagement with a country like Afghanistan into this monster, into this hard thing that everyday people can't engage. It starts with demystifying this.

[Hannah Beaulieu]

Nasrat Khalid Businesses in the country are engaging with each other, but there's a long way to go to boost the economy. GDP is rising in part due to agriculture and mining sectors. But the World bank estimates it will take a decade for Afghanistan's economy to recover to the level it was at before the Taliban takeover. This is the boss of an Afghan business network. For safety reasons, we'll call him Akmad.

[Ahmad (Business Network Boss)]

The main barriers is basically the legal and regulatory environment. It is very unpredictable and many businesses are unable to predict the future of their businesses. And it's mainly due to the lack or in existence of a proper legal and regulation military environment in place.

[Hannah Beaulieu]

What's it like working internationally as well? Are there barriers to international trade?

[Ahmad (Business Network Boss)]

Certainly Afghanistan having a government that is not recognized by the Triheim community, we are unable to do international trade. Particularly our cross border trade is faced with a lot of barriers from time to time. We do not have proper trade agreements with our neighbor and regional countries. And often these countries impose trade barriers from time to time on Afghan products and that obviously kills the businesses in Afghanistan.

[Hannah Beaulieu]

How important is the private sector in terms of Afghanistan's future stability and sustainability?

[Ahmad (Business Network Boss)]

Well, the private sector is the future of Afghanistan. There is no future for Afghanistan without its private sector. It has also been consciously said and shown in the past that you cannot build your country with aid money or with international assistance. It cannot replace and it's not an alternative for the long term economic growth and stability.

[Hannah Beaulieu]

Is there a lot of work to do to get to that position?

[Ahmad (Business Network Boss)]

The last two years, you know, we saw that the private sector literally saved the country. But it's a very long way to go in order to get to the point that you can really think about having a vibrant and stable economy in which the private sector we see that the current government is trying to facilitate and support the private sector when it comes to working in Afghanistan.

[Hannah Beaulieu]

That's Ahmad, the boss of a business network. The Republic has fallen, its leaders fled. Taliban rule is returning day by day, its fighters more visible on the streets of Kabul.

[Narrator/Reporter]

Governments are being urged to send cash to Afghanistan as the country is at risk of a humanitarian catastrophe and an economic collapse. Live from London, this is BBC News. Rescue work continues in Afghanistan, where the Taliban say at least 1400 people have been killed by the powerful earthquake that struck the east of the country. The UN says the decision by the Taliban authorities in Afghanistan to shut down the Internet risks inflicting significant harm on people across the country. The UN's Assistance Mission has called on the Taliban authorities to immediately restore Internet and telecommunications access. Mobile phones, flights and businesses have been disrupted.

[Hannah Beaulieu]

The issues impacting Afghanistan have been numerous. In August this year, the country was hit by its third major earthquake in four years. In the immediate aftermath, rescue and humanitarian efforts were reportedly hampered by a shortage of aid, poor and damaged infrastructure and a lack of health facilities. In the days after, a spokesperson for the Health Ministry in Kabul called for more international aid to help with the recovery. The economic impact of that most recent earthquake is still to be assessed, but the World bank estimated in 2023 that the earthquake that year hit GDP by up to 0.8%. Currently, it's only Russia that recognises the Taliban government. Moscow said it saw the potential for commercial and economic cooperation in energy, transportation, agriculture and infrastructure when making the announcement in July. Kate Clark from the Afghanistan Analyst Network says there is some hope for the future.

[Narrator/Reporter]

The Taliban are very much in favour of private sector and they say that for it to flourish, the sanctions need to go altogether. They need to be recognised as the legitimate government. They need the travel ban on their members lifted and they need an unfreezing of the Afghanistan's reserves that are held in America and Europe. And they say if that happened, they can do the rest. As a country, they're able to stand on their own two feet. They don't need the aid. All that is true, probably, but you get this hard impasse between the Emirate and the powers that be who don't want to lift the sanctions. While, for example, girls can't go to secondary school, women are banned from a lot of work. They have very severe restrictions on their movement and dress. Everyone keeps saying you need to make those changes to your policies on women and girls. You need to have a more inclusive government. For sanctions to be lifted, that needs to be. There needs to be a shift on either on one side or the other, and that's not happening.

[Hannah Beaulieu]

Samira Syed Rahman agrees. She's the advocacy and Communications director for Save the Children based in Afghanistan. The organization works closely with businesses to promote self sufficiency across the country and she says there's Huge potential.

[Samira Syed Rahman]

What we've seen, you know, in the last year or two years is that the Afghan private sector has really stepped up to fill that void from, you know, the lack of foreign funding that has been coming out. If the banking conditions and the liquidity challenges and the issues of lack of access to credit are resolved, I see an Afghan private sector that is thriving. In five years, Afghanistan can be a self sufficient country if its private sector is functioning, if we are allowed to do trade with neighboring countries, if you are able to do imports and exports. Despite all the global challenges and despite the incredible history of challenges that this country faces. If there's one thing that Afghans can be proud of is that they are able to pick up the pieces and rebuild and move on. And the Afghan private sector can really play a role in that. Five years from now, I hope to see an Afghan private sector that is the backbone of the Afghan economy. Where we go from a barely surviving Afghan economy to one where there is mobility, there is ability to work, there is progress and profit.

[Hannah Beaulieu]

We asked the Taliban authorities to respond to the issues raised in this program, but we didn't hear back. Sanctions on individuals in the Taliban regime, the sudden loss of income and industry after US backed forces left in 2021, an inefficient banking system and infrastructure, a lack of foreign investment, women being excluded from the workforce and deflation have all added to the country's woes as well as the natural disasters and disruption to communication. Afghanistan has weathered it all. But for lasting prosperity, the people like those we've heard from today, need greater attention. That's all from Business Daily from the BBC World Service, produced and presented by me, Hannah Beaulieu. Listen to more episodes wherever you get your BBC podcasts.

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